UPDATE from the Editor: On March 16th, two days after this blog article was published, Blue Shield announced that it has decided to cancel the rate increase scheduled for May, and said it would not raise rates again for the rest of the year.
I have a friend, Patty, who worked as a waitress to pay her way through college. She worked hard and studied hard, so when she got sick and couldn’t get better, she just chalked it up to stress. For two years, Patty was chronically ill with mysterious and debilitating symptoms. She knew she should go to the doctor, but she didn’t have health insurance through work, and she couldn’t afford to buy insurance and pay for rent and tuition at the same time. So she never went to the doctor. Eventually, Patty ended up in the hospital, where she was diagnosed with a thyroid problem. Since she had not gotten care for so long she had to immediately have surgery, which left her with $10,000 in medical debt.
Patty is just one of the 8.4 million Californians who lack health insurance. Californians who don’t have job-based insurance are left to purchase coverage on their own in the individual market—a maze of complicated and overwhelming options hawked by giant health insurance corporations that know how to make a profit. The high cost of health coverage drives many people like Patty into the ranks of the uninsured, because they just can’t afford to buy insurance and pay rent at the same time.
Patty didn’t have health insurance. But even if she did, the rate increases proposed by Blue Shield would have priced her right out of the market. A recent report states that Blue Shield is proposing insurance premium increases as high as 86.5 percent for some policy holders and 45,500 customers will see increases over 50 percent. The total includes three rate increases in the last six months, from October, January and now another one pending in May.
Policy holders were already understandably upset over Blue Shield’s proposed 59 percent increases —so why did that figure jump to 86.5 percent? Turns out, when Blue Shield originally said 59 percent, they neglected to include the October increase in the totals—they only included the two from 2011. Oops, sorry!
Frustrated policy holders have had an ongoing battle with Blue Shield, and now the Department of Insurance has entered the fray. After Blue Shield filed for a rate increase, Insurance Commissioner Dave Jones asked the insurance giant to postpone the planned March 1st increase so the Department could review the rate filing. First Blue Shield refused outright. Then they complied with the request, but thumbed their nose at the Department and released their own study of the rate increase request. To no one’s surprise, Blue Shield found that their rate increase was “reasonable, not excessive.”
Reasonable? Really? Reasonable for whom? I’m sure Blue Shield thinks its ‘reasonable’ to jack up prices during a recession when millions of Californians have lost their jobs, their homes and their savings. But I doubt that the 200,000 Blue Shield policy holders find the increase ‘reasonable.’ I doubt the people who will no longer be able to afford health care and can’t take their kids to the doctor find it ‘reasonable.’ And I highly doubt that the millions of uninsured like Patty find it ‘reasonable’ that even when they work hard at their jobs every day, they will never be able to afford to buy health insurance.
Blue Shield and the other insurance giants who have recently increased health insurance premiums argue that they have to raise prices to cover their costs. They cite soaring medical costs and state and federal mandates, including the federal health reform, as forcing them to raise prices. Yes, medical costs are soaring. But Blue Shield is not exactly a helpless victim in all of this. Insurers play a pivotal role in driving reforms that will reign in costs and make health care more affordable and accessible. They could actually reign in those costs themselves, if they were driven by more than just their own bottom line.
We can no longer afford to pay the skyrocketing price for health insurance. We can no longer afford to have 8.4 million of our fellow Californians go without doctor visits, check-ups, vaccines and basic care because they can’t afford it.
The new federal health care reform law is a step in the right direction, but there is more than needs to be done in order to rein in outrageous premium increases that are forcing more and more Californians into the ranks of the uninsured.
The first step should be to give state health insurance regulators the power to actually regulate the rates health insurers charge. Right now, when Blue Shield files for a rate increase, regulators can make sure that their numbers check out and meet some minimal standards, but they cannot actually stop an insurer from raising rates. Assemblymember Feuer is moving a bill to change that. AB 52 (Feuer) would give the Insurance Commissioner the power to approve rate increases before they go into effect—and to make sure increases are actually reasonable— for people, not just profits.